The Top Challenges of Managing Your Own Logistics and How a 3PL Can Help
In-house logistics might sound appealing initially, but when you see all the complications associated with it, outsourced services often emerge as the more effective option. A third-party logistics (3PL) provider specializes in areas of distribution, fulfillment, warehousing and transportation, bringing industry-specific expertise and sophisticated systems to the table while helping you focus on growing your business.
Logistics is a complicated field, especially when you consider the necessary resources, evolving compliance requirements and scalability of your approach. Doing it yourself can be difficult, if not impossible, and 3PL providers often give better service at lower costs. They have skilled teams, sophisticated systems and plenty of expertise. Let’s take a closer look at some of the biggest challenges in transportation and logistics and how 3PL providers address them.
Challenge 1: Limited Expertise and Resources
Most businesses don’t have unlimited funds lying around to create a high-caliber team of logistics experts or buy the latest and greatest software systems and tools. Solving common logistics problems calls for many different resources and professionals who understand the various aspects of transportation, warehousing, compliance, etc. Hiring these professionals and buying resources yourself can be expensive and time-consuming. Consider the costs of hiring new employees, for example, and making room for large pieces of equipment.
A 3PL provider will usually offer their services through affordable, recurring costs without any capital investment on your part. Since logistics is all they do, you can expect a 3PL provider to have a team of highly skilled, well-trained professionals offering expertise in different areas for a fraction of the cost of in-house hiring. Working with a 3PL can significantly reduce the strain on your team and business resources.
Challenge 2: Increasing Complexity and Scale
The supply chain is always evolving, and your business will likely grow. Adapting to these changes is hard to do in-house. If your logistics operations need to scale up, you may need to hire more professionals or buy more equipment. If a new sales channel or technology appears, you may need to modify your approach. These tasks take time and money, and keeping pace with them can be incredibly challenging.
As an outsourced service provider, 3PL partners are ideal for scalability. They can generally accommodate high capacities, and all you need to do is talk over the changes with the provider. Whether your business grows or you want to tackle a spike in sales near the holidays, 3PL providers can adjust accordingly.
Since they offer a wide range of services, a 3PL partner can help you branch out into new areas or try new things without high capital investments. These flexible, scalable solutions can allow you to make business decisions more freely, even in the face of a complicated landscape.
Challenge 3: Operational Inefficiencies and Costs
With so much complexity, it may not be a surprise that in-house logistics are prone to inefficiencies. They often lack the proper technology and infrastructure to move products efficiently. Manual processes, for example, can be much slower than automated systems, and strained budgets can keep businesses from obtaining the necessary automation equipment. Inefficiencies like these can cause delays, bottlenecks and higher costs associated with slower operations. Managing the varying costs of logistics, such as chaotic fuel prices, can also be difficult.
3PL organizations are especially interested in working efficiently and reducing costs. After all, those metrics affect their success, too. They also have the support of expert logistics professionals and sophisticated resources. A 3PL provider continuously optimizes for efficiency and low costs. They may even be able to help you save money by accessing lower rates through their large network of partners. With these partners, you can expect products to move more efficiently for reduced costs.
Challenge 4: Compliance and Risk Management
Staying up to date with compliance and risk management requirements can be a monumental task. Regulatory requirements are always changing, and you must continuously conduct assessments and evaluations to mitigate risks in the supply chain and your business. As requirements change, you’ll need to respond accordingly. Compliance and risk mitigation become increasingly difficult and expensive as you scale and expand a business. For example, some countries prohibit shipping certain items, and you cannot risk violating these laws as you branch into new regions.
Violations can be expensive, both through fines and the additional work required to rectify the situation. They may also be detrimental to your reputation. Avoiding compliance issues is crucial and usually requires an expert. Risk management is similar and often calls for a skilled professional with a pulse on many different industries.
Naturally, a 3PL provider pays attention to regulations and standards and has people on hand to tackle compliance problems and reduce risk. Outsourcing logistics shifts some responsibility onto the 3PL partner while leveraging their expertise in other areas to help you avoid risk and stay compliant. They can be especially helpful in tackling the volatility of the supply chain industry.
Challenge 5: Customer Service and Satisfaction
Logistics plays a major role in the customer experience. While in-house logistics can provide more control over the customer experience, they also create many opportunities for errors and inefficiency. Without an accurate, streamlined system, you will likely introduce delays and inconsistencies, leading to negative interactions with your company.
Sophisticated systems are also essential for providing visibility, which many customers now expect. They want to know when their order will arrive and be able to see its location in real time. Implementing such a system can be difficult, time-consuming and costly. For a 3PL provider, these programs are a central part of the job and solve major logistical challenges. 3PL partners understand them and have the IT support to keep them running smoothly.
3PL partners also run their services like a well-oiled machine, so you can expect fewer delays and errors that would affect your customers. This dependability can provide big dividends for your customer satisfaction ratings.
Additionally, 3PL providers can support your customer service goals with expert guidance. They can work with you to develop a plan that improves the customer experience through direct communication or optimization in areas like efficiency and accuracy. 3PL partners and their long-standing knowledge of the field can be significant assets for impressing your customers.
Overcome Your Biggest Logistical Challenges With Crown LSP Group
In-house logistics may work for some organizations, but those companies often have massive budgets and resources to spend. Taking the job on yourself can entail some significant logistics problems, like scaling the operation, minimizing costs, staying compliant and appealing to your customers. A 3PL provider takes the legwork out of logistics so you can focus more on what you do best. We leverage a skilled team dedicated exclusively to logistics and distribution solutions to help your business thrive and avoid these challenges.
At Crown LSP Group, we have decades of experience in the field and insights across many industries. We work as an extension of your business to reduce costs, improve quality and provide a stellar customer experience every time. Whether you need to scale, accommodate unique products or customize your approach, our knowledgeable professionals can help. Learn more about our approach online, or request a quote today to get started!